Pemex Heads for Home

Mexico's domestic bond market came of age in January when
state-owned oil company Petróleos Mexicanos (Pemex)
issued MP11.5 billion ($1.05 billion) in certificados
bursátiles, the largest peso deal ever by a private
or public sector issuer. This reopening of Pemex's debut MP6.5
billion, three-tranche bond simultaneously achieved excellent
pricing and added liquidity to the three existing points on its
local market yield curve. However, the bond's low price also
highlighted growing frustration among Mexican pension fund
managers at the low yields on Mexican triple-A securities. Some
fund managers stayed away from the Pemex deal because it was
priced too aggressively.

Pemex exploited the pricing advantage of issuing in pesos,
instead of hard currency, just as several investment grade
corporate issuers have done over the last three years. Mauricio
Alazraki, head of capital markets at Pemex, says, "If...